Endovia Health Sciences, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statement Regarding Forward-Looking Statements The information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations relating to our plans with respect to our legacy beverage business, our plans, goals and projections with respect to our development and commercialization efforts for our cannabinoid business, the prospective market for our licensed product for human and veterinary uses, the development and commercialization of regulated cannabinoid and wellness products and their potential qualities and success, potential acquisitions and strategic transactions, and our ability to raise the necessary working capital and uses of proceeds therefrom. Any statements that are not of historical fact may be deemed to be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks included in our Annual Report on Form 10-K for the year ended December 31, 2025 and in other reports and registration statements filed by us with the United States Securities and Exchange Commission. These factors may cause our actual results to differ materially from any forward-looking statements. The Company disclaim any obligation to publicly update these statements or disclose any difference between actual results and those reflected in these statements . Unless the context otherwise requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to Splash Beverage Group and its subsidiaries. The following discussion and analysis should be read in conjunction with the Condensed Financial Statements (unaudited) and Notes to Condensed Financial Statements (unaudited) filed herewith. Business Overview Splash is a Nevada corporation that was historically seeking to identify, acquire, and build early stage or under-valued beverage brands that have strong growth potential within its distribution system. During the current fiscal year beginning January 1, 2026, Splash has moved away from beverages and is focusing on the cannabinoid and wellness economy businesses. As a result of its lack of meaningful sales in the beverage business, Splash is transitioning to the regulated wellness and cannaboid markets. The second quarter of 2026 marked an important strategic inflection point for the Company as management began repositioning Splash Beverage Group from a legacy beverage company toward a cannabinoid health and wellness platform focused on long-term value creation. To that end, the Company filed a name change in Nevada to change its corporate name to Endovia Health Sciences, Inc., which is expected to take effect on the NYSE American on August 24, 2026. The name change reflects the Company’s strategic transformation from a legacy beverage business into a diversified cannabinoid health sciences platform focused on commercializing pharmaceutical assets, advancing FDA-regulated human and veterinary therapeutics, and developing innovative cannabinoid wellness and beverage products. During the second quarter of 2026, the Company continued evaluating strategic alternatives designed to reposition its business for long-term growth. While Splash Beverage Group has historically operated as a branded beverage company, management believes the Company's public platform, industry relationships and leadership experience present opportunities to participate in higher-growth segments of the cannabinoid health and wellness industry. As part of this strategic evaluation, the Company explored opportunities to expand beyond its legacy beverage portfolio through acquisitions, licensing arrangements and strategic partnerships involving cannabinoid wellness products and related health technologies. Although the previously announced proposed merger with Medterra was ultimately not completed, management believes that process reinforced its conviction regarding the long-term opportunity within the cannabinoid sector and informed the Company's current strategic direction. The Company's strategic repositioning has been led by Interim Chief Executive Officer Brady Cobb and Interim Chief Operating Officer Mike Bondurant, each of whom has significant experience building, financing, operating and commercializing businesses within the cannabinoid industry. Management believes this experience provides the Company with a differentiated perspective as it evaluates opportunities across pharmaceutical, wellness and consumer cannabinoid markets. 27 Following the end of the second quarter, the Company began executing this strategy through a series of transactions and strategic initiatives intended to establish a diversified cannabinoid health sciences platform. These developments are discussed elsewhere in this Quarterly Report and in the Company's other filings with the Securities and Exchange Commission, including its Current Reports on Form 8-K. Management remains focused on pursuing capital-efficient opportunities that leverage strategic partnerships, proprietary intellectual property and experienced leadership while seeking to create sustainable long-term value for shareholders. On July 6, 2026, the Company acquired the exclusive worldwide rights to the pharmaceutical product marketed under the brand name CannEpil®, comprising the licensor’s proprietary compounded isolated cannabinoid formulation of CBD and THC isolates, for the treatment, prevention, management, or amelioration of drug-resistant epilepsy, refractory epilepsy, seizure disorders, and all related neurological conditions in humans. The Company subsequently expanded the license to include veterinary uses, and entered into an agreement with a third party collaborator in an effort to develop and commercialize the product under the expanded use. The Company generated revenue in the first quarter of 2026 from sales of Chispo tequila to a single customer, however that customer has since terminated its contract with us. We are no longer seeking to market Chispo and are pursuing the development and commercialization of CannEpil® and other potential strategic transactions. Reverse Stock Split . The Company recently filed a certificate of change to its Articles of Incorporation to effect a one-for-four reverse stock split of each of its issued and outstanding and authorized shares of Common Stock. The reverse stock split took effect at 4:30 pm ET on July 24, 2026. Share and per-share amounts throughout this quarterly report give effect to the reverse stock split. As a result of the Reverse Stock Split, every four shares of Common Stock issued and outstanding were converted into one share of Common Stock. All outstanding securities entitling their holders to purchase or otherwise acquire shares of Common Stock, including stock options, warrants and restricted stock, were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities. Results of Operations for the Three Months Ended June 30, 2026 compared to Three Months Ended June 30, 2025. Results of Operations for the Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025. Revenue There were no revenues for the three months ended June 30, 2026 and June 30, 2025. Revenues for the six months ended June 30, 2026 were less than $0.01 million compared to revenues of approximately $0.05 million for the six months ended June 30, 2025. The $0.04 million decrease in sales is due to a decrease in our beverage sales of $0.04 million. In fact, we did not generate any revenue in fiscal year 2025 after the three months ended March of 2025 due to a lack of operating capital which has hindered the Company’s ability to generate sales since that time. This revenue came from sales of Chispo tequila to one customer which has since terminated its contract with us. We are no longer seeking to market Chispo, and have instead shifted our focus to pursuing the development and commercialization of CannEpil® and other potential strategic transactions. Cost of Goods Sold There were no cost for the three months ended June 30, 2026 and June 30, 2025. Cost of goods sold for the six months ended June 30, 2026 were less than $0.01 million compared to cost of goods sold for the six months ended June 30, 2025 of approximately $0.05 million. The $0.05 million decrease in cost of goods sold for the six-month period ended June 30, 2026 is primarily due to our decreased sales. Operating Expenses Operating expenses for the three months ended June 30, 2026 were $2.0 million compared to $1.5 million for the three months ended June 30, 2025 an increase of $0.5 million. The increase of non-cash share-based compensation $1.1, reduced contract services $0.2. million and reduced salary and wages of $0.6. million and increased operational and general and administrative expenses of $0.3 million related to new line of business activities in 2026. Operating expenses for the six months ended, 2026 were $3.0 million compared to $3.2 million for the six months ended June 30, 2025 a decrease of $0.2 million. The reduced contract services $0.2 million and reduced salary and wages of $0.6 million were partially offset by increased operational and general and administrative expenses and sales and marketing of $0.3 million related to new line of business activities in 2026 and increased non-cash share-based compensation $1.1 million. Gain on Extinguishment of debt During the three months ended June 30, 2025 the Company recognized a Gain on Extinguishment of debt of $5.6 million compared to nil for the three months ending June 30, 2026. During the six months ending June 30, 2025, the Company recognized a Gain on Extinguishment of debt of $5.6 million compared to nil for the three months ended June 30, 2026. Net Other Income and Expense Interest expenses for the three months ended June 30, 2026 was $0.23 million compared to $0.6 million for the three months ended June 30, 2025. The $0.37 million decrease in interest expense is due to notes were converted to preferred stocks after June 30, 2025. Interest expenses for the six months ended June 30, 2026 was $1.12 million compared to $1.26 million for the six months ended June 30, 2025. 28 Other income was $0.01 and $0 million for the three months ended June 30, 2026 and June 30, 2025 respectively. Amortization of debt discount for the three months ended June 30, 2026 was approximately $0.01 million compared to $0.6 million for three months ended June 30, 2025. Amortization of debt discount for the six months ended June 30, 2026 was approximately $0.03 million compared to $1.7 million for six months ended June 30, 2025. Discontinued Operations Due to the lack of working capital to fund operations, Splash formed a license agreement with a 3 rd party to allow the continued production and flow of product to the customers so that it could later be recovered as the funding challenges were then deemed as only temporary. As the lack of funding persisted through the full year of 2025 the company subsequently determined it no longer intends to relaunch the Copa Di Vino(“CdV”) product line. As a result, accordingly, the Company has classified the related assets and liabilities associated with its CdV as discontinued operations in its consolidated balance sheets and the results of its logistics and transportation services business has been presented as discontinued operations in its consolidated statements of operations for all periods presented as the discontinuation of its business had a major effect on its operations and financial results. Unless otherwise noted, discussion in the other notes to consolidated financial statements refers to the Company’s continuing operations. The following table summarizes the results of operations of discontinued operations: 3 months ended 6 months ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Revenues $ — $ (23,406 ) — $ 393,072 Cost of revenues, excluding depreciation and amortization — (321 ) — (416,913 ) Gross loss — (23,727 ) — (23,841 ) Operating expenses — (106,872 ) — (480,995 ) Other expenses (46,393 ) — (46,393 ) — Loss from discontinued operations $ (46,393 ) $ (130,599 ) $ (46,393 ) $ (504,836 ) LIQUIDITY, GOING CONCERN CONSIDERATIONS AND CAPITAL RESOURCES Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. As of June 30, 2026, the Company had total cash and cash equivalents of $242,702 as compared with $281,435 at December 31, 2025. As was disclosed in a press release and 8-K filed by the Company on June 3, 2026, the Company reported a going concern disclosure. Specifically, pursuant to Section 610(b) of the NYSE American Company Guide, the Company has reported that its audited consolidated financial statements for the fiscal year ended December 31, 2025, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2026, contain an audit opinion from its independent registered public accounting firm that includes an explanatory paragraph regarding the Company’s ability to continue as a going concern. We have sustained recurring losses and we have had working capital and stockholders’ equity deficits. These prior losses and expected future losses have had, and will continue to have, an adverse effect on our financial condition. In addition, continued operations and our ability to continue as a going concern may be dependent on our ability to obtain additional financing in the near future and thereafter, and there are no assurances that such financing will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through sales of our products, financing or from other sources or transactions, we will exhaust our resources and will be unable to continue operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months. Net cash used for operating activities during the six months ended June 30, 2026 was $2.0 million as compared to the net cash used by operating activities for the six months ended June 30, 2025 of $1.4 million. The primary reasons for the change in net cash used are decreases in inventory, accrued expenses and accounts receivable partially offset by increases in account payable. Net cash used for investing activities for the period ending June 30, 2026 we sold a company-owned vehicle and invested $0.2 million in Avicanna and for the period of June 30, 2025 had no capital asset transactions. Net cash provided by financing activities during the six months ended June 30, 2026 was $2.2 million compared to $1.45 million provided from financing activities for the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company received $2.9 million for selling shares under ELOC agreement, which was offset by repayments to debt holders of $0.74 million. Off-Balance Sheet Arrangements The Company do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. 29 Critical Accounting Estimates The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Revenue The Company faces significant judgment in revenue recognition due to the complexities of the beverage industry’s competitive landscape and diverse distribution channels. Determining the timing of revenue recognition involves assessing factors such as control transfer, returns, allowances, trade promotions, and distributor sell-through data. Historical analysis, market trends assessment, and contractual term evaluations inform revenue recognition judgments. However, inherent uncertainties persist, underscoring the critical nature of revenue recognition as it significantly impacts financial statements and performance evaluation. Allowance for Doubtful Accounts The allowance for doubtful accounts is established based on historical experience, current economic conditions, and specific customer collection issues. Management evaluates the collectability of accounts receivable on an ongoing basis and adjusts the allowance as necessary. Changes in economic conditions or customer creditworthiness could result in adjustments to the allowance for doubtful accounts, impacting our reported financial results. Inventory Valuation We value inventory at the lower of cost or net realizable value. Estimating the net realizable value of inventory involves significant judgment, particularly when market conditions change rapidly or when excess or obsolete inventory exists. Management regularly assesses inventory quantities on hand, future demand forecasts, and market conditions to determine whether write-downs to inventory are necessary. Fair Value Measurements We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value measurements involve significant judgment and estimation, particularly when observable inputs are limited or not available. Management utilizes valuation techniques such as discounted cash flow models, market comparable, and third-party appraisals to determine fair values. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required for Smaller Reporting Companies.